Capital Taxation and Electoral Accountability

Toke S Aidt () and Francesco Magris

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: In a representative democracy, voters can use elections to protect their property by holding politicians accountable for the tax policies they implement while in office. This paper demonstrates that performance voting can - partly or wholly - solve the capital levy problem. We characterise the ‘best’ non-expropriating tax policies that can be sustained in a stationary Markov Perfect Equilibrium; show when this coincides with the second best tax policy; and discuss, in detail, the robustness of the result.

Keywords: performance voting; capital taxation; time consistency (search for similar items in EconPapers)
JEL-codes: H21 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-pub
Date: 2003-02
Note: PE, ET
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Related works:
Journal Article: Capital taxation and electoral accountability (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:cam:camdae:0318

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